A will is a necessary part of estate planning, but it’s less clear at what age a will becomes necessary. Even among experts, there’s no consensus on when you should draft your first will. The following are two opinions to consider when making your decision.
Melanie MacDonald, Partner, Borden Ladner Gervais LLP.
I would recommend you have a will, even without substantial assets, a spouse or kids. Otherwise, assets must go through the probate process, an immediate cost to your survivors. Most lawyers charge fixed amounts, which could run into a couple of thousand dollars.
In most Canadian provinces, if you don’t have a spouse or children, your assets go to your parents. But you might prefer to have it go to siblings or friends — people with greater financial need. Alternatively, you can support a cause by making a gift from your estate. Having a will also reduces uncertainty around how to handle the estate, removing an extra strain on family members during a difficult time.
Speak your will
There’s more to a will than listing who gets what. The document can specify who will manage the estate, and it can address guardianship and trust funds for any minor children. You can also draft power of attorney and healthcare directives in case of physical or mental incapacity. The healthcare directive can specify where you’d live (home, hospice, long-term-care facility, etc.), what your activities would be (hobbies, trips, day-to-day physical activities, etc.), and who can visit.
In many provinces, you can also address end-of-life wishes, such as the treatment you want if you enter a vegetative state, or how long you’d want to be on life support. Laws in most Canadian provinces specify that whoever you appoint must follow your wishes.
If you have special medical conditions, the directive could facilitate decisions about what kinds of treatments can be tried. You can also specify preferences for organ donation.
Digital assets are also becoming part of estate planning — our questionnaires have sections about email, Facebook, Twitter, LinkedIn and Dropbox accounts. Unless otherwise specified, your executor will be in charge of your social media identity.
We recommend you keep a separate list with usernames and passwords, and a list of bank accounts and safety deposit boxes, for your executor.
Other assets you might overlook are Air Miles and reward points — anything that could potentially be transferred. You can also leave instructions about how to use biological material such as frozen sperm or eggs; these are especially sensitive and could leave the family in quandary absent specific instructions.
You shouldn’t wait until you have accumulated assets. It’s time to think about wills as soon as you have anything in your name — you have bank accounts, and possibly RRSPs or TFSAs.
You should also think of wills if you receive inheritances; and if you have life insurance through work, you can choose a beneficiary but also have the option to name the estate as beneficiary and let a will govern how proceeds will be distributed.
Right place, right person
Most provinces respect wills that are signed wherever the drafter lived at the time. But if you move outside Canada, review your will and make sure it’s still valid in your new country.
Review your will every couple of years to make sure it reflects your current situation and wishes. You can make small amendments without redoing the whole will.
Create a separate personal effects memo that mentions all valuables, such as jewelry, car, boat, antiques, etc. Then have your will specify that your executor should distribute personal items in accordance with the memo so you can avoid making constant changes to your will.
Richard Austin, Counsel at Conduit Law Professional Corporation
When you’re young and healthy, with a modest income, no assets, spouse or kids, it seems excessively cautious to spend $200 on a will.
Worse, the document might only just address where you’d like to be buried or cremated, or to whom your personal possessions would go. You don’t need an executor to carry out those wishes; you can just tell family and close friends.
You might have insurance policy at work, but it makes more sense to name a beneficiary — rather than create a will just for the purpose — as the benefits go directly to the beneficiary or the estate and are not subject to probate or any other fees or taxes.
Similarly, you can name beneficiaries for registered accounts such as RRSPs, as well as TFSAs.
The main purpose of a will is disposition of assets. If you don’t have any, you don’t need one. With items that are of greater sentimental than monetary value, it’s ok to tell family and friends while alive who gets what.
Power of attorney
If you’re worried about becoming physically or mentally incapacitated, it’s better to draft a power of attorney, or what some people call a living will.
Ontario, for example, has two kinds of living wills: one for assets; the other for physical care. The latter covers organ donation wishes.
You should think of drafting a will when you marry, are in a common-law relationship, have children, or start acquiring significant assets, such as a home.
A typical situation would be a young couple with kids and assets that aren’t jointly held. One spouse may want to ensure that while the surviving spouse can have income from the assets, they should ultimately pass on to the kids.
DIY kits are inexpensive options for people who like to document things, but these kits could have faulty or confusing directions which could void your will. Regardless, once you acquire assets you’d like to pass on, it’s time to give up DIY.